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Category Archives: Free Courses
The Value of College Goldman report (Click)
Alternatives to College
Joel Greenblatt on Valuing Stocks
FREE CLASS in New York City
Whitney Tilson through www.kaselearning.com will be teaching value investing and hedge fund entrepreneurship to the next generation of investors. His programs are aimed at experienced investors and are very hands-on, so they aren’t cheap ($1,500-$2,000/day), but for beginners, he is offering a free two-hour seminar, An Introduction to Value Investing, in midtown NYC (57th and 7th) on Wed., April 4th from 5:30-7:30pm, followed by a cocktail hour. If you’d like to come, just email firstname.lastname@example.org and Whitney will send you details.
Investing and Hedge Fund/Entrepreneurship “Boot Camp” And other Courses.
I attended Whitney Tilson’s and Glenn Tongue’s February 6th – 8th Boot Camp. I was initially skeptical but pleasantly surprised.
Overall, I was impressed with the learning materials, the organization, and most importantly, the participants who attended. Whitney and Glenn were brutally honest and forthright in showing the rise and fall of their business. One can know the lessons of Munger, Buffett, Graham, and behavioral finance but still fall into a pit. Our main enemy is likely to be ourselves. There were many lessons taught, but my promise of confidentiality prevents me from giving details. The course would not be appropriate for a rank beginner, but for an entrepreneur who wishes to launch their own fund.
The main value–besides the lessons taught–would be to cultivate relationships with the participants including Whitney and Glenn. I wouldn’t go to Whitney to help you get a job, but if you do a rigorous analysis of a company, I am sure Whitney or Glenn could give you honest feedback. And if they liked your work, they might suggest how you could reach a larger audience. Also, your classmates could help. The opportunity to build strong relationships with knowledgeable investors and hedge fund managers would be invaluable for someone beginning their fund.
Each day was ten hours long with meals and cocktails afterwards, so you had plenty of opportunity to develop relationships.
Upcoming dates are April 29th to May 1st
and June 12th through 14th.
There are other courses available as well.
Make sure you receive at least a 10% discount on the course or other courses by using “CSI10“ when you register.
If you want details on my experience of the course and what you might expect, please don’t hesitate to email me at email@example.com with BOOT CAMP in the subject line. I will be happy to discuss with you.
Here are my notes of the comments from the other attendees:
“Regarding last week, I was super impressed by the material. I liked the practical nature of the lessons they taught – a lot of courses exist that cover investing philosophy, but this was unique in its applicability to a start-up manager like myself.”
“The main lesson I learned from the course was to keep it simple. Look for the easy investments.”
“I actually really liked the emphasis on short selling, because it tends to be one of the great struggles of hedge funds that need to be long & short to justify the carry but have difficulty executing on compelling short ideas in the midst of a bull market.”
“I would have liked more on portfolio construction because that is what I am struggling with. Ditto for risk management and small funds. Things I loved – the interaction of our group, the LL case, the mea culpas of what Whitney and Glenn did right and wrong.”
All the participants told me that they both enjoyed the boot camp and found it useful in developing their fund.
Future Boot Camps
Whitney solicited feedback each day, therefore, Whitney and Glenn should improve their course offerings.
I give a thumbs-up. To learn more about the boot camp/Kase Learning programs you can go to www.kaselearning.com.
Also, view a video
I will periodically update information on Kase Capital for interested readers. If you learn anything from reading this post it should be to KNOW THYSELF! The market is an expensive place to find out. John Chew
The hedge fund founder explains why his fund was “sucking the joy” out of his life — and why he’s turning its failure into a teachable moment.
By Michelle Celarier
March 20, 2018
Whitney Tilson’s Facebook friends surely thought he was on top of the world last summer.Photo after photo posted on the social media site tells the story of a rich, exciting life: There’s Tilson watching whales off the coast of Iceland. Next, he’s on the canals of Amsterdam with his wife and daughter. Just a few days later, he’s checking out Lenin’s tomb in Moscow. Last August he even climbed to the top of the famed Eiger mountain in the Swiss Bernese Alps, photographing every step of the arduous journey.
But to hear Tilson talk today, the reality was grim. After 18 years in the hedge fund business, his firm — Kase Capital Management — was losing money, and Tilson found himself dipping into hissavings to keep it afloat.
“I had lost my passion for the game,” Tilson confided in a two-hour, soul-searching interview about the events that led him to shut down his hedge fund last September. After gaining 184 percent, net — when the broader market was up only 3 percent — during the first 11 and a half years of his hedge fund’s existence, Tilson’s returns had been floundering. Since 2010, Tilson says, he trailed the Standard & Poor’s 500 stock index, and in 2017 he had lost almost 9 percent on the year by the time he shut down his fund. “In an ironic twist, I always built my firm to survive the worst storm, but it was a nine year bull market — complacency and sunshine — that took me out.”
Tilson is one of several veteran hedge fund managers, including Eton Park Capital Management’s Eric Mindich, Hutchin Hill Capital’s Neil Chriss, Eclectica Asset Management’s Hugh Hendry, and Blue Ridge Capital’s John Griffin, who called it quits in 2017. Small hedge funds come and go with great regularity, but the inability of the industry’s stars to profit as the stock market soared to new heights has raised questions about the viability of the model. Tilson was a much smaller player than the others — at his peak he managed only $200 million — but his experiences are a window into the headwinds that have faced these former masters of the universe.
What distinguishes Tilson from many of his peers is his willingness to talk about the long, excruciating road down. “It’s hard, after seven years at sucking at something, to wake up and tap-dance to work. So, I found myself getting distracted. I wasn’t physically getting out of shape; it was the opposite. I was going and climbing mountains. This one part of my life, I was miserable at; I was having no success. It’s hard to have the self-discipline to focus all your attention like a laser, and all your spare time on a particular part of your life in which you’re getting so much negative reinforcement.”
Last year, as his fund’s losses began to mount, Tilson says, “I didn’t feel like I could look my investors in the eye and say, “˜Look, I’m losing you money, but I’m not doing anything else, 18 hours a day that I’m awake, the only thing I am doing is trying to turn performance around.’ ” The vacation photos notwithstanding, Tilson says he even felt guilty attending his daughter’s soccer games. “My hedge fund was sucking all the joy out of my life.”
Tilson’s introspection is uncommon for those in the hedge fund business, where selfconfidence and salesmanship are as important to success as any investing prowess. As Tilson readily admits, managers cannot afford to be frank while they are going through turmoil, lest they further hurt their business — and their investors. “The last thing you want to do is air your dirty laundry. That will further shake the confidence of your investors.”
But there’s another reason for Tilson’s uncommon openness: His experiences, both positive and negative, have led him to create a whole new business, turning Kase Capital into Kase Learning (Kase stands for the first letters of the names of Tilson’s wife and three daughters). From a small conference room at the New York Athletic Club, Tilson has started teaching the perils and profits of investing in general — and running a hedge fund specifically — to aspiring youngsters who don’t come out of big seeding platforms like Julian Robertson’s Tiger Management or a multibillion-dollar hedge fund.
“Unless you are the lucky 1 percent who has the chance of learning in an apprenticeship, how are you supposed to learn how to do this?” Tilson says. “Nobody teaches the next generation. There is not one business school on the planet that teaches anything really usable to starting up your own hedge fund.
“It’s so rare to talk to a manager who is injected with truth serum, isn’t it?” he asks as he details his long bumpy journey through hedge fund land. “But I don’t give a crap anymore.”
Seminar of Financial History
In an age when an algorithm is the main competitor for many fund managers, what can we know that they don’t? Algos understand the data trail of history, but this trail provides only limited insight into the key lessons of financial history for investors. In this talk, first provided at the 62nd Annual CFA Institute Financial Analysts Seminar, Russell Napier discusses those 21 most important lessons from financial history that allow human beings to profit at the expense of the machines. 1 Hour on-line seminar Feb. 1, 2018. Register (CSInvesting.org: I believe it is free: https://www.cfainstitute.org/learning/events/Pages/02012018_138012.aspx
Regardless of whether you can attend, read relentlessly about financial, economic, and common history. Note what Jim Grant of Grant’s Interest Rate Observer says:
But our main goal is to tell you the next important event in the markets. And sometimes we succeed.
– As with the tech bubble in 1999
– The 2008 mortgage crash
– The 2009 recovery in financials
– And the 2012-13 rise in house prices
How have we been so prescient over the years?
We don’t have fancy, financial computer models or a team of MBAs and Ph.D.’s to help us make these predictions. And we don’t have access to any kind of special information.
But we have been immersed in the markets for over 30 years. And we’ve studied the financial history of the past 200 years. None of which guarantees clairvoyance—nothing does. What we do claim is the capacity to see the present in the context of the helpful lessons of the past.
Like when we warned about the mortgage debt bubble in September 2006.
From the Sept. 8, 2006 Grant’s:
“Overvalued,” we, in fact, judge trillions of dollars of asset-backed securities and collateralized debt obligations to be, and we are bearish on them. Housing-related stocks may or may not be prospectively cheap; they at least look historically cheap. But housing-related debt is cheap by no standard of value. For institutional investors equipped to deal in credit default swaps, there’s an opportunity to lay down a low-cost bearish bet.
368353935-GMOMeltUp J. Grantham says that the current market does not YET show the characteristics of a bubble despite being highly valued.
Update (1/10/2018) Runaway Train – Dec 2018
Advanced Seminar in Human Action
12/06/2017 Mises Institute
Arguably one of the greatest thinkers of the twentieth century, Ludwig von Mises created a framework for all of economic science beginning with the simple axiom that individuals act. In his magnum opus, Human Action, he described economics as a branch of the theory of human action and stressed how broadly it spans, far beyond a discussion of mere money and prices. Mises said, “Economics must not be relegated to classrooms and statistical offices and must not be left to esoteric circles. It is the philosophy of human life and action and concerns everybody and everything. It is the pith of civilization and of man’s human existence.” For Mises, it was imperative that everyone learns economics, calling it “the main and proper study of every citizen.”
Human Action is a challenging read. With over 800 pages of dense material, study tools are very helpful. The course, Advanced Seminar in Human Action, is a useful addition to other materials like the Human Action Study Guide.
In this course, leading Austrian economists walk the student through Human Action a chapter at a time.
If you’ve ever wanted a push to help you get through the book or if you’ve wondered about your own reading of the material, here is your opportunity to study Human Action with David Gordon, Joe Salerno, Jeffery Herbener, Peter Klein, Guido Hülsmann, and Mark Thornton.
Human Action by Ludwig von Mises is available for free on Mises.org and for purchase as a paperback and hardcover in the Mises Bookstore.
The teachers are excellent and Human Action is the Magnum Opus of Ludwig von Mises. The book is a DIFFICULT read but there is a study guide, lecture videos, and lecture slides for all the chapters of the book. You will have a strong grounding in economics and improve your reading and critical thinking skills, but if you are a beginner, I would opt for https://www.mises.org/library/economics-one-lesson
I have not seen the videos in the link below. Let me know if you learn anything practical.
Listen to the interview: https://soundcloud.com/valuewalk/pitch-the-perfect-investment-with-paul-sonkin-and-paul-johnson
Other than seeing the videos and listening to the interview, I have yet to read the book. The book may help an analyst learn how to form their ideas into a concise report. Remember than many money managers have nano attention spans, so you must get your idea across quickly in a compelling way.
That said, one area that might not have been covered is how to KNOW THYSELF! What approach fits your interests, skills and talents and how do you accomplish the goal of knowing your circle of competence? Then how do you learn from mistakes? How do you track your learning and results? Because of randomness, learning from past investments is more difficult than it appears. Spend as much time studying yourself as the company you are pitching!
The above is not a knock on the book; I believe self-knowledge is an underemphasized skill of the investment game.
UPDATE: 9/27/2017 http://pitchtheperfectinvestment.com/2017/09/27/92617-video-from-book-launch-event-at-fordham/ A more recent set of videos explaining the motivation for the book.
A tutorial on the dangers of Indexing investing.
Know what you are doing IF you buy index funds! You can learn a lot by studying Horizon Kinetics. The video provides a valuation of the index and how to think about investing or not in indexes.
Also, more on indexing here:
Article announcing Stoic Mindfulness and Resilience Training (SMRT) 2017 with details of live webinar sessions, etc.
Enrolment is now open for the Stoic Mindfulness and Resilience Training (SMRT) 2017 online course. This is a free eLearning course, which Donald Robertson has been running once or twice each year for Modern Stoicism since 2014. You can access the preliminary area now and the four weeks of the course will officially begin on Sunday 16th July, when enrolment will close. This year over 500 people enrolled within the first 48 hours after it was announced on social media. Around 650 people are now enrolled and we anticipate that will have increased to nearly 1,000 by the course start date.
In the first year, over 500 people took part in SMRT and data was collected from participants, using the Stoic Attitudes and Behaviours Scale (SABS) and a battery of validated outcome measures of the kind used in research on CBT and positive psychology. You can download a PDF of our report here showing the findings in detail: SMRT_Report_2014
The writings of Seneca! http://tim.blog/2017/07/06/tao-of-seneca/
CSInvesting: Though this philosophy takes active practice, you might find developing the ability to control your thoughts and reactions to what you encounter in daily life helpful–especially in dealing with Mr. Market. Below is a schema of Stoicism (Click on diagram, then enlarge through your browser to read text).
Learning from Grants:http://grantpub.libsyn.com/episode-1-grants-interest-rate-observer
Why “smart” people do dumb things. Rational thought. https://www.scientificamerican.com/article/rational-and-irrational-thought-the-thinking-that-iq-tests-miss/
http://csinvesting.org/2017/04/13/hedge-fund-quiz-economies-of-scale/ for the last post on this case study. Note excellent comments by readers.
Readers provide excellent analysis
The twenty-minute time limit was to force you to concentrate on the key issue: Does this company have economies of scale? Because of it doesn’t, then growth will NOT help profitability. In fact, growth with losses financed by debt can be financially lethal.
Part of improving as an investor is avoiding the disasters as this company turned out to be. Bad Management_Has Avenues Mastermind Chris Whittle Learned His Lesson and Failure in For Profit Education are two articles that chronicle the investor and management failures in the For-Profit-Education Sector.
The goal of this case study is to practice:
Our 10-K reading skills and our analysis of competitive advantage. Despite how CRITICAL it is for an investor/management to determine and distinguish competitive advantages, structural advantages are often confused with outcomes or efficiency.
Competitive advantage refers to something specific–a structural barrier that prevents competitors from simply replicating the results of a successful business. It should not be surprising that the terms competitive advantage and barriers to entry are interchangeable.
Without barriers to entry, a business cannot long enjoy an advantage over competitors that will quickly do the obvious—enter. This process of new entry will hurt not only relative performance but also absolute performance, as competition for customers dampens revenues, and competition for resources raised costs.
FIRST MOVER ADVANTAGE
First, it is NOT a competitive advantage. But here is an example of having a first mover advantage. You and I are in a duel. We walk ten paces away from each other then turn and shoot the other. After three paces, you turn around and shoot me in the back–now THAT is a first mover advantage.
Scale not size matters
It is industry structure determines which categories are most likely to manifest themselves and in what form.
Size doesn’t matter, but scale does. Scale is a relative concept, not an absolute one. The benefit it bestows are relative to peers within the relevant competitive set.
Look at WD 40_VL the company has a competitive advantage in PRODUCT SPACE. WD-40 is the ubiquitous oil/lubricant that people keep in their tool-box/shelf/or under the sink. They own 90% of the lubricant market. However, they also di-worsify their free cash flow into hand soap and motor-cycle products. Now the stock is over-priced in my opinion. If management could sell off its non-competitive products, and then become a tontine (use free-cash flow to buy in all shares)–investors would flourish.
Having 2% of a 10 billion dollar market or $100 million in sales is probably not as profitable as having sales of 40% of a 200 million dollar market or $80 million in sales.
Scale matters most when fixed costs matter most relative to the business’s overall cost structure. With large fixed costs, the operator serving the most customers will have a significant advantage due to its ability to spread those costs over more unit sales. If the costs of a business were entirely variable and increased proportionally as it grew, there would no advantage to scale. The extent of the advantage is determined by how relatively important fixed costs are how relatively large the business is compared to the next competitor. Second, much of what is thought of as traditional fixed costs in school management—admin, school relations and lobbying, and even curriculum development—has a significant variable component.
Curriculum requires local customization. The two primary sources of fixed-cost scale in education generally are content development on the one hand and sales and marketing on the other.
Reading the 10-K
We jump to page 27: Selected financial data and see rising sales financed by issuing shares and debt. Yet costs are not declining as a percentage of sales. Ebitda is declining per student. 1999 revenues of $133 million almost triple to $376 million in 2001 yet operating cash flows decline from negative $17.6 to negative $29.3.
Remember the little red school house? Edison Schools has to provide services in a regional area. If they can develop density (or clustering as management mentions on page 16 under competitive strengths) in particular regions, then perhaps this company needs more time to show progress? To determine their success in implementing a “clustering strategy, the next pages to peruse are pages 13-15 where you can see where Edison is operating schools. Take a large state like Colorado. Edison has two schools in Denver and three in Colorado Springs. Washington, DC, a huge metro area, only has eight schools and on and on. Management will not be able to leverage their admin, curriculum and development cost over such a widely dispersed area.
Imagine running a carting/garbage pick-up service where you have 5 customers in Eastern Connecticut, seven in New Jersey, 4 in Texas, you would go broke just driving to the different customers. You would lack customer density in your routes, so your costs would be too high.
PASS! Then if the analyst had more time, he/she could look at management. He or she would uncover the ugly history of Chris Whittle. No mention of that in the Credit Suisse analyst 50-page report.
Studying competitive advantages like economies of scale, customer captivity, network effects, low-cost producer will pay-off. Practice reading case studies of success and failure will help you hone your skills.
One of the best books I have found on studying competitive analysis is
Strategic_Logic (Strategic Logic link will be down in 36 hours, so join the Deep-Value Group by following the links http://csinvesting.org/2015/01/14/deep-value-group-at-google/ and ask for a copy.
https://www.youtube.com/watch?v=zsvnvV3wDgc Greenwald of Columbia Business School discusses local advantages.
The trilogy of books, Competitive Demystified, The Curse of the Mogul, and Class Clowns will also provide more depth to your studies:
It is 2006, and you want to know the true sustainable free cash flow of Mohawk because you love sleepy, mundane industries that are slowly growing. Why? Because people love to buy lottery tickets and glamour so you “go where they ain’t.”
So what is the difference between Mohawk’s GAAP earnings per share and your estimate of FREE CASH FLOW per share? Use cash flow from operations and maintenance capex (which you need to roughly estimate). Be roughly right, not precisely wrong.
Can you explain the difference? What is going on with Mohawk and the industry? Note the ten-bagger or 25% CAGR for almost ten years (move over Buffett) from the 2009 lows. Surprising or not? MHK-2006 AR FCF Analysis. Can you use this as a way to find other ten-baggers?
Of course, the above question is not hard for you since you have already read this 412 page book several times: Wiley Creative Cash Flow Reporting. You do not have needed to read that book to answer the question. Use common sense and a small bit of accounting knowledge like (amortization of goodwill-hint!)
This an example of how the analyst course would teach. You have to do many case studies to practice learning concepts like free cash flow. Like flying and sex, you have to practice.
Update: April 11, 2017: The price you pay
If you pay too much even for a great business, then you will have poor returns.
Take the three Value-Lines of Coke (KO). VL KO and note the $80 + plus price, then track its free cash flow (as calculated by Value-Line which is After-tax earnings plus depreciation + amortization then minus capital expenditures), then earnings. Track the price and those metrics: KO_VL_Jan 2013 and Ko_VL 2017. You will see that on average cash flows and earnings and dividends rise from 1998 until 2017, yet returns have been just OK. Paying too high a price hurts your total returns even with a strong, stable business like Coke. Investors were extremely optimistic over Coke’s growth prospects. If you held Coke for a long time, your return would equal the company’s long-term return on equity.
Also, Buffett’s non-controlled public investments have generally lagged the S&P 500 Berkshire Hathaway AR 2016.
Good luck. Those who do not provide the correct answer will have to spend time with my ex-wife:
- Prior mentions of an analyst course with readers’ suggestions were posted:
There are plenty of other investing courses ranging from free to $20,000.
http://www.tradingacademy.com/ Here you can learn technical analysis and trading techniques for $5,000 to $20,000. I won’t say this is a scam, but you won’t learn anything than you could find in a $20 book on technical analysis. Then ask yourself if and how technical analysis has ANY value?
https://www.udemy.com/value-investing-bootcamp-how-to-invest-wisely/ A typical $200 course for beginners.
http://www8.gsb.columbia.edu/execed/program-pages/details/61/VI ONLY $7,200 for three days. Learn from the famous Prof. Greenwald. How can you be a value investor and then pay that amount?
https://www.quora.com/What-are-the-best-online-value-investing-courses Look for yourself.
http://pages.stern.nyu.edu/~adamodar/ FREE. But even an “expert” like Prof. Damodaran can make critical mistakes as pointed out here: http://csinvesting.org/tag/vale/ You must understand economics, banking, and credit cycles!
https://youtu.be/_uQjGz6jp2E?list=PLF1wHLfTCGUQ85w90LIg-1YXZdnUKOGtO 91 short lectures on Buffett. Not bad. A good supplement to your readings of Buffett.
https://youtu.be/Jo1XgDJCkh4 M. Pabrai opines about value investing. How to invest in 100-baggers. I think Mr. Pabrai will beat the averages, but he has had 80% declines in his portfolios (2008/09). Learn the proper lessons and NEVER cease thinking for yourself.
What Can I Contribute?
Based on my research, I still believe there is a place for a serious, rigorous, and a comprehensive course and resource center to help investors be better independent thinkers and analysts of businesses. Over twenty-five years, I have collected a huge array of investment writings, case studies, lectures, etc. that would help serious investors–the equivalent of four graduate level courses on investing. Why pay $60,000 per year to go to graduate school to learn value investing. Well, students pay the $60,000 for the name brand, the certificate and the relationships with other students. Not a apples-to apples comparison–to be fair.
The issue now is organizing and reformatting the material so both beginner and expert can improve. My bias is to learn from great investors from theory to case study. There is nothing new investing that hasn’t been said before by Buffett, Graham, Klarman, and Jesse Livermore. Why not learn from them instead of from a flatulent, tenured business professor (ironic?!).
While at college, I worked as a pilot. Learning to fly used the theory of flight that the student applied in good, day-light weather with a flight instructor, then progressing to independent flight. Even Munger says the process of flight training is efficient.
Investing is a craft or both an art and science. You need the expertise and experience to place facts, information into perspective. An investor must understand how capital is allocated by management (Corporate Finance). Take dividends. There are many perspectives to view dividends, but dividends are paid out of FREE CASH FLOW. So what is free cash flow and how can we know if it is sustainable? To understand that you must convert accounting information into underlying reality. An entire 412 page book is devoted to all the issues surrounding sustainable free cash flow, http://160592857366.free.fr/joe/ebooks/tech/Wiley%20Creative%20Cash%20Flow%20Reporting.pdf
You understand the details but you should not get lost in minutiae because you must focus on what is important and applicable to the opportunity.
Therefore, the course will need to cover the basics like:
- Does value investing work?
- Important concepts: How to read, how to think. How to learn.
- Studying great investors as they apply value investing principles.
- How to value businesses.
- Analyzing competitive advantage or disadvantage.
- When to concentrate and bet heavily/using options, stubs.
- Subsets of value investing: Growth, special situations, and distressed.
- And many other skills
You must know: (1) how to value a business and (2) how to think about prices. The devil is in YOU and the details.
You either buy an undervalued asset/non-franchise business that is subject to reversion to the mean (growth doesn’t add value) or
You buy a franchise that depending upon its moat has slower reversion to the mean. Growth is valuable within a franchise.
The course will take students through those two types of investments with case studies. Students then can refer to Buffett, Graham and others who applied value investing.
One goal would be to help students develop their OWN investment philosophy.
How to SEARCH, VALUE, MANANGE A PORTFOLIO, and IMPROVE THE YOU are involved in having a comprehensive investment philosophy. You will have a library of investors’ different approaches and philosophies.
I probably need four to six months to put the course together. Several of you have kindly offered to help. I appreciate your interest, and I will reach out at the appropriate time.
The goal will be to have a resource for students to build a strong foundation of skills and knowledge with an area to communicate with one another.
All for now.